TPP11 Agreement in Principle: Japan s Role in Mega-regional Trade Agreements December 15, 2017 Shujiro URATA Waseda University
Contents Mega-regional FTA Negotiations Japan s objectives behind mega-regional FTAs Background of TPP11 Contents of TPP11 Rationale for TPP11 RCEP Negotiations RCEP and TPP11 Japan s Role in constructing mega-regional FTAs Japan s Role in Reconstructing/Improving Global Trading Environment
Mega-regional FTA Negotiations (competitive regionalism) Trans-Pacific Partnership (TPP) negotiations began with eight APEC member countries (March 2010) Japan announced to join TPP negotiations (March 2013) China-Japan-Korea FTA negotiations began (March 2013) Japan-EU EPA negotiation began (April 2013) Regional Comprehensive Economic Partnership (RCEP) negotiations began with 16 East Asian countries (May 2013) Transatlantic Trade and Investment Partnership (TTIP) negotiations began (July 2013)
Region-wide FTAs in East Asia: RCEPP, TPP, China-Japan-Korea (CJK) FTA RCEP(ASEAN+6) (ASEAN+CH, JP, KR, IND, AUS, NZ) TPP Vietnam Viet Nam Malaysia Singapore Japan Brunei TPP Canada USA Mexico Peru Australia New Zealand Chile ASEAN+1 FTA India China Korea Japan Australia & NZ China-Japan-Korea FTAAP (APEC) Russia China Korea Japan CH. CH. Taipei HongKong Thailand Brunei Malaysia Vietnam Singapore Philippines Indonesia PNG Australia New Zealand Canada US Mexico Peru Chile
Japan s objectives behind mega-regional FTAs Revitalize Japanese economy (Growth strategy, 3 rd arrow of Abenomics) Increase business opportunities for Japanese companies in foreign markets in the forms of export and foreign direct investment (FDI) by opening FTA members markets through elimination/reduction of import tariffs and business barriers/obstacles (foreign markets are important in the face of population decline in Japan) Promote domestic policy reform in Japan (e.g. agricultural reform)
Background of TPP11 TPP negotiations began in March 2010 with eight APEC members (Brunei, Chile, New Zealand, Singapore, Australia, Peru, US and Vietnam) Malaysia joined in October 2010 Canada and Mexico joined in November 2012 Japan joined in July 2013 Reached an agreement in October 2015 Signed in February 2016 Japan ratified TPP in December 2016 US withdrew in January 2017 TPP11 talks began in May 2017 Reached an agreement in principle in November 2017: Comprehensive and Progressive for TPP (CPTPP)
Contents of TPP11: High level (trade and FDI liberalization) and comprehensive coverage: 21 st century trade agreement Total Agricultural products Industrial products Eventual elimination Immediate elimination Eventual elimination Immediate elimination Eventual elimination Japan 95 51.3 81 95.3 100 US 100 55.5 98.8 90.9 100 Canada 99 86.2 94.1 96.9 100 Australia 100 99.5 100 91.8 99.8 NZ 100 97.7 100 93.9 100 Singapore 100 100 100 100 100 Mexico 99 74.1 96.4 77 99.6 Chile 100 96.3 99.5 94.7 100 Peru 99 82.1 96 80.2 100 Malaysia 100 96.7 99.6 78.8 100 Vietnam 100 42.6 99.4 70.2 100 Brunei 100 98.6 100 70.2 96.4
Issue Coverage: TPP, RCEP, WTO TPP RCEP WTO Market Access for Goods Rules of Origin and Origin Procedures Textiles and Apparel Customs Administration and Trade Facilitation Trade Remedies Sanitary and Phytosanitary Measures Technical Barriers to Trade Investment Cross Border Trade in Services Financial Services Temporary Entry for Business Persons Telecommunications Electronic Commerce Government Procurement Competition Policy State-Owned Enterprises and Designated Monopolies Intellectual Property Labor Environment Cooperation and Capacity Building Competitiveness and Business Facilitation Development Small and Medium-Sized Enterprises Regulatory Coherence Tranparency and Anti-corruption Administrative and Institutional Provisions Dispute Settlelement Note: indicates the issue is covered, is likely to be covered,. is partially covered. Sources: TPP are taken from the TPP text and RCEP are based on the information given by RCEP "Guiding Principle and Objectives for Negotiating RCEP" and other sources
From TPP12 to TPP11 Suspended provisions: Annex of CPTPP 20 provisions including: Intellectual property rights related provisions including data protection for new medicines including biologics, copyright term Investment: Investor-state dispute settlement (ISDS) Services: express shipments Four remaining issues State owned enterprises (Malaysia) Services and Investment non-conforming measures: coal (Brunei) Dispute settlement (trade sanctions): (Vietnam) Cultural exception (Canada)
Rationale for TPP11 Enacting a high-level and comprehensive agreement would promote economic growth Can be a model FTA for future FTAs Can be a step toward larger FTA such as FTAAP: Especially important as China is attempting to construct China-driven business environment by the Belt and Road Initiative (BRI) and the Asian Infrastructure Investment Bank (AIIB) Fight against rising protectionism Prepare for a possible return of the US to the TPP
Economic Impacts of TPP11 and Other FTAs National Changes in value (change in %) Income TPP TPP11 TPP16 Japan-US TPP11+ in 2030 RCEP (TPP12) FTA RCEP (billion) Japan 4,924 125 46 98 60 56 93 (2.5) (0.9) (2.0) (1.2) (1.1) (1.9) US 25,754 131-2 -6 52 1-2 (0.5) (0) (0) (0.2) (0) (0) TPP11 15,257 333 157 280 58 75 214 Members (2.2) (1.0) (1.8) (0.4) (0.5) (1.4) World 133,801 492 147 449 120 286 408 (0.4) (0.1) (0.3) (0.1) (0.2) (0.3)
RCEP: Negotiations Since the early 2000s, discussions on Chinaled ASEAN+3 FTA (EAFTA) and Japan-led ASEAN+6 FTA (CEPEA) began to be discussed. China and Japan jointly proposed to accelerate discussions in either form, i.e. EAFTA or CEPEA in 2011 ASEAN responded by proposing RCEP (ASEAN+6) in 2011 RCEP negotiations began in May 2013 RCEP negotiations missed targeted goals of concluding negotiations several times
Contents RCEP and TPP Issue Coverage: TPP > RCEP Level of liberalization: TPP > RCEP Objectives RCEP: equitable development, cooperation TPP: high aspiration, innovation Relationship Complementary: Low income and developing countries can join RCEP and achieve economic development and then can join TPP11
Japan s Role in constructing mega-regional FTAs Japan and 10 TPP11 members successfully achieved an agreement in TPP11 (CPTPP) negotiations in November 2017 Japan and the EU finalized their EPA negotiations in December 2017 Japan and other TPP11 members should invite potential members including South Korea, Indonesia, Thailand, Philippines and Taiwan to join the TPP11 Japan-US Bilateral FTA: with a condition that the US consider return to the TPP Japan should approach the Pacific Alliance (Mexico, Chile, Peru, and Colombia) for possible FTA Japan should also approach Mercosur (Brazil, Argentina, Uruguay, and Paraguay) for possible FTA
Japan s Role in Reconstructing/Improving Global Trading Environment Japan should lead talks (with like-minded countries) on rules in new issues including IT-related services such as e-commerce possibly in the form of plurilateral agreements such as information technology agreements (ITA) Japan should use various platforms including TPP11, APEC, and WTO Japan has to deal with its own challenges such as protected sectors including agriculture, in order for Japan to lead the discussions